Marcellus producer reiterates 5-year plan, highlights drilling

Range Resources used its first quarter investor update to remind shareholders of the true intent for is five-year plan the company released last year.

The plan, CEO Jeff Ventura said, is to continue the process of high-grading the portfolio while it de-levers through non-core asset sales or other under-appreciated inventory. The goal is to move to become an investment grade portfolio company. The company currently has a market cap of $3.4 billion, net debt of $4.1 billion, an enterprise value of $7.5 billion and SEC proved reserve value of $8.1 billion.

According to Range Resources, the SEC definition of proved reserves excludes several-thousand top-tier Marcellus locations and other upside in the Utica, Upper Devonian and Lower Cotton Valley. “I believe this represents one of the largest disconnects in value in E&P today,” Ventura said. “We believe that consistent execution of our plan and prudently addressing leverage should begin to square those valuations.”

The plan for Range is to continue drilling longer and longer laterals. This quarter, Range drilled two record-length wells, reaching lengths of greater than 17,000 feet. “We’ll see what the results are from these wells later this year but if these wells produce EURs that are in line with our type curve,” Ventura said, “the extended laterals would improve our normalized well cost in returns by approximately 17 percent.,” adding that “pushing average lateral length beyond 10,000 feet is consistent with our plans and expectations, but it’s worth noting, that this efficiency wasn’t assumed in our five-year outlook.”

For the first quarter, Range has drilled five percent longer laterals at a pace 12 percent faster per day in Q1 versus the average in 2017.